"It's now moved six times in seven meetings and has essentially said that lending rates, including mortgage rates, are about at average levels," Mr Robertson said.

"That was basically the purpose of the significant tightening we've seen since last October.

"I think sooner or later, probably within the next few months, the Reserve Bank will marshal new arguments about why policy doesn't need to be neutral-average-normal.

"It needs to be somewhat restrictive given the extent to which the economy has bounced from last year's disasters, the extent that house prices, commodity prices, share prices have all moved up and all suggest the economy is moving forward quite nicely."

Mr Robertson says Australia already has a template for tight monetary policy after mortgage rates were pushed to 9 per cent before the global financial crisis.

"When the economy was overheating the Reserve Bank was very worried about the up-shift in inflation to a 4 or 5 per cent rate," he said.

"The Reserve Bank did put the cash rate to 7.25 per cent and it did give a green light for mortgage rates to reach 9 per cent."

And before the landscape changed due to the global financial crisis, it was contemplating pushing interest rates even higher.

Expect the RBA to pause next month at the very least, but it may just be the pause that refreshes.

Commonwealth Bank chief economist Michael Blythe says after three rate rises in a row the RBA has hinted at pausing to assess what impact those moves are having.

"What comes through very clearly in [the] commentary again is the importance of that commodity price story and the way that's going to inject a lot of income into the economy at a time when it's already running close to full capacity," Mr Blythe said.

"That means increased inflation risks and it probably means a move into restrictive policy settings as we get towards the end of this year.

"[The] policy rate will be around about 5 per cent by late 2010 and will be pushing towards 6 per cent in 2011."

Mr Blythe does not think Australia will see mortgage rates up at the 9.5 or 10 per cent levels, but he says it will be uncomfortable nonetheless.

Deja vu

The economic conditions are similar to 2007 before the global financial crisis hit, when a mining boom was boosting the terms of trade, showering the nation with income and demand and inflation were being stoked by capacity constraints and a lack of skilled labour.

"Each month's jobs report is going to give us some sort of guide as to the pressure on the Reserve Bank to do more or not," Mr Robertson said.

"To the extent the unemployment rate continues to trend down, full-time employment continues to trend up, then the Reserve Bank will have a bias to tighten further."

The statement by Mr Stevens noted that headline and underlying inflation rates are about 3 per cent, much higher than earlier expected.

And the Reserve Bank is likely to revise up its inflation forecasts when it releases its quarterly statement on monetary policy on Friday.

"I think the Reserve Bank will pause at least one meeting. They've done three in a row so I think June probably [there] will be nothing done," Mr Robertson said.

"But as early as July the Reserve Bank may have marshalled the arguments as to why policy doesn't need to just be at a neutral setting - it needs to be somewhat restrictive.

"So I think the Reserve Bank from here is one careful step at a time, but there's a clear and growing bias for rates to go substantially higher."

That is provided the China bubble does not burst and the sovereign debt woes in Europe do not spread.